The New Frugality by Chris Farrell is a new personal finance book that discusses a growing trend in America towards frugality. As we claw our way out of the Great Recession, American families are going back to smarter and safer spending after a near decade at the buffet table of cheap credit. This isn’t a book with a million different ways to pinch a penny, it’s a book that seeks to teach you how to be smarter with your money in actionable ways.(Click to continue reading…)

A few weekends ago, I was listening to Marketplace Money when they ran an interview of Scrubs star Donald Faison. Faison got his big break with the movie Clueless and then followed that up with Scrubs. The entire piece was about him making bad money decisions and then turning it around. He bought a $20,000 car with the $12,000 from Clueless, then had trouble when the third car payment came around.

Welcome back Marketplace Money listeners! I once again had the great pleasure of joining fellow personal finance bloggers Lynnae of BeingFrugal.net and Steve of Brip Blap for a chat with host Tess Vigeland of Marketplace Money, one of my favorite personal finance radio shows (yes, waaaaay before I was ever blogging).

Welcome Marketplace Money Listeners!

Please allow me to be the first to welcome you to our corner of the personal finance blogosphere.

I’ve been a personal finance blogger for about four years, the last year and a half of which have been full-time, and I write about anything and everything dealing with my money. You can read more about me on the About page.

Some of the more popular sections of the site include a Devil’s Advocate series where I argue against conventional wisdom, just to get the other side’s perspective, as well as the numerous financial product reviews I do, which includes financial products, books, and other widgets.

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There have been newsreports that Goldman Sachs, which recently became a bank holding company, might be considering opening an online bank as a means to generate deposits. Yesterday, Marketplace did a story about the report and here were some interesting quotes (and you should’ve heard these two guys too):

HOWARD DAVIDOWITZ (retail consultant in New York): This is a company that deals at the highest levels with America’s largest corporations, in the most sensitive sorts of deals, with the wealthiest people in the world. I don’t see how this enhances their brand.

JON OGG (investment advisor): If they want to do that, then they might as well start selling stamps online too.

I loved how these two guys seemed to look down at people who use online banks as somehow beneath them. I’ll take my 100% safe, government guaranteed high yield savings account thank you very much.

There was one quote that I did agree with:

RICHARD SPEER: There’s no shortage of Internet banking offerings. In general, most of those have been very successful in attracting high-rate deposits. They have not been successful in building relationships.

There are a lot of online banks and there isn’t much relationship building going on. I’m going to send my deposits to whichever bank will offer me the highest rates. However, I’d argue that I have no relationship with Bank of America, the bank that I have my checking account with, either. I’d also say that outside of my business checking accounts with M&T Bank, I’ve never had a relationship with any bank I’ve done business with.

Speer is right, if they want deposits, they’ll have to pony up a good interest rate.

I think Marketplace, a series of shows produced by American Public Media, is one of the best places to get straight-forward financial information for regular people like you and me. They boil down complicated and arcane ideas, ones dreamed up by a room full of financial wizards (or witches, depending on how recently you saw your 401(k) statement) and their pointy hats, into simple to understand ideas you can take away. I try to listen to all the shows whenever I get a chance.

To supplement the audio, which is downloadable for free (in case you can’t catch it on the radio or your local affiliate doesn’t carry it), they also offer some videos online to explain some of the more complicated subjects. Recently they published a video explaining how credit card debt is turned into (“securitization”) asset backed bonds.

There are a bunch of videos, all of them are brief and definitely worth watching when you have some free time.

As you not doubt have heard or read, the bailout bill never made it out of the House yesterday. The Dow was down seven hundred and seventy-seven points. 777. No very lucky. That’s a lot of points (single largest point loss ever and fourth larges percentage-wise). If you missed the roller-coaster ride, count yourself lucky because you and I and probably everyone you know (certainly most of the people I know anyway), none of us have any control over the matter. So rather than sweat the stuff we can’t control, start concentrating with something you can – being smart with your money.

Last week I had the pleasure of chatting once again with Lynnae of BeingFrugal.net, Steve over at Brip Blap, and Tess Vigeland of Marketplace Money in this interview. In our little discussion, Tess asked us what we thought the future would bring and Lynnae had a great answer. She said that she hopes this will bring out a new era of frugality as people ratchet back their consumer spending and boost their savings. She thinks that our years of excess are coming back to haunt us and hopes this will spur more people to save, rather than spend their last dollar.

Steve responded by saying that while frugality is important, looking to generate more income is another component of wealth management that we shouldn’t forget. While I agree with Steve, I think that we’re in an era where it’ll be far easier to spend less than it is to earn more. While you need to do all things in moderation and in balance (you can’t just be frugal, just as you can’t just focus on earning more money), right now frugality is the easier thing to focus on.

Being frugal is something that anyone can do and it can help you manage your fear of the economic unknown. No one can say where the stock market will go tomorrow, but you have all the say in where your next dollar will go. Will it go to your bank account where you can earn interest or will it go to your favorite store in the mall?

You don’t have to make your detergent or bake your bread or split two-ply toilet paper or buy a toothpaste roller to squeeze out ever last ounce, there are plenty of simple and fun things you can do to save money. Try cooking more meals and eating out less. Try line drying your clothes rather than using the dryer. Heck, if you need tips, check out Lynnae’s blog because it’s chock full of them! Or read the Festival of Frugality every week for great tips from all of the blogosphere’s frugal bloggers.

If you only listen to our clip, you should consider listening to the whole radio show because there’s a piece where Stephen Hoffman interviews some children on the economic crisis. It’s absolutely adorable and priceless. They’re in Chicago and there’s one girl who says she’d resort to buying stuff in another country… like Detroit!

About Me & BFP

If, after my answers, you’re curious as to who I am, I discuss a little about myself and this site on the About page. I try to touch on all personal finance topics from banking to frugality, the stock market to saving for a home, and everything in between. If it deals with our money, how to save more of it, how to spend less of it (and still maintain a happy lifestyle), then chances are I’ll touch on it. If I don’t, tell me about it and I’ll try! And if you ever want to reach me, you can email me at the address in the upper right or use this handy contact form. Thanks!

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On a drive up to a local restaurant last week to celebrate our friend’s final Master’s class, my wife and I were listening to this segment of Marketplace on commuter bikes. The segment talked about how more people are biking to work and how expensive these commuter bikes were. They range anywhere from a couple hundred to five figures! It’s an astonishing price to pay for a bicycle but here’s the truly astonishing part about it – many pay without any reason to.

First, Marketplace talked to Richard Fries of Bikes Belong, a bicycling advocacy group, and he said that you just need a simple bike to get you from A to B. All you need “is the bike that Curious George had. You know what I mean? Fenders, chain guard, a little rack to strap your books onto. Does wheelies. Gets around town.”

Then they talked to Susan Brady, just a regular Jane consumer who bikes every day to work:

Brady: I mean, the cool thing about bikes is you can spend a little or spend a lot, and they’re all gonna pretty much do the same thing.

Cole (Marketplace reporter): That’s what I’m wondering, why you would spend a lot.

Brady: Cause I thought I’m never gonna be able to buy a house, so I might as well buy a nice bike.

Woah. Now, it’s one thing to justify the price with good reasons and another to justify it like that. For example, high end mountain bikes are expensive because they are made of carbon fiber (to be lighter), have high end shock absorbers (to handle the rugged terrain), and other similar characteristics that improve performance and durability. While you do pay a premium, it’s likely that most seasoned mountain bikers recognize what they are getting for their money. This is the very reason why I advocated Acting Your Age Financially and how you shouldn’t hit the premium aisle before checking out the discount bin.

While the Marketplace segment might have had some editing involved, the fact that Brady’s best response was that “she can’t afford a house” is astonishing. That reasoning isn’t uncommon though. I had a friend once email out to a bunch of our friends lamenting the fact that home prices are so high in our area. There’s no way he could afford a home here. That’s when someone pointed out that the reason he can’t afford a home is because he has a boat and a new truck to tow the boat.

We all make decisions and trade offs, don’t say you can’t afford a house and then go out and buy a ridiculously expensive bicycle. You sound foolish and it’s insulting, especially to all the hard working Americans scraping by and saving all of their money so they can afford a place of their own.